The CoinSpeech team is thrilled to highlight the recent insights shared by Benjamin Cowen. Below you can find Benjamin Cowen’s new video, but first, let’s dive into the most compelling points he discussed.
The Stablecoin Supply Ratio (SSR) Explained
The stablecoin supply ratio is calculated by dividing Bitcoin’s market cap by the stablecoin market cap. This metric provides insights into the buying power that stablecoins could potentially exert to purchase Bitcoin.
Cowen emphasizes, “The reason why we’re interested in stablecoins is because it gives us an idea of the buying power that those stablecoins could theoretically have to purchase Bitcoin.”
Trends and Interpretation
Tracking the SSR from 2019, it showed a general decrease until December 2022, where it began to rise. Cowen explains that a low or decreasing SSR suggests stronger buying power for Bitcoin, while a high or increasing SSR indicates weaker buying power. “As the line goes up, it would theoretically mean that the stablecoins have weaker buying power,” he adds.
Analyzing the Stablecoin Supply Ratio Oscillator (SSRO)
Cowen brings particular attention to the SSRO, a more nuanced tool that oscillates between certain thresholds to offer deeper insights. When the oscillator hits ±2, it aligns with the extremities of the Bollinger Bands, illustrating moments of significant market sentiment.
“When the oscillator is plus or minus two, it’s hitting that upper part of the Bollinger band,” Cowen points out, stressing the similarities and differences between market behaviors in 2019, 2021, and 2023.
Historical Patterns and Market Predictions
Cowen notes that historically, when the SSRO is at its lower limits, it often indicates Bitcoin price lows. These patterns are echoed across different time periods, enhancing the metric’s reliability. “One of the reasons we track this is because there’s a low level sort of a limit to the downside where it tends to find support,” he mentions.
Future Outlook
As of now, the SSRO is nearing lower values, hinting that the market may be cooling off and might drop to levels seen in August 2023. Cowen suggests this could reflect a “summer low” period where market activity slows down. He concludes that these metrics offer a valuable framework to anticipate Bitcoin’s price movements.
Below, you can watch Benjamin Cowen’s new video to delve deeper into this analysis.